Duncan Royle Ι 17 May 2018 ACCOUNTING FOR NATURAL & SOCIAL CAPITAL FOR WATER COMPANIES

Transcription

1 Duncan Royle Ι 17 May 2018 ACCOUNTING FOR NATURAL & SOCIAL CAPITAL FOR WATER COMPANIES

2 DRIVERS IN THE WATER SECTOR Several drivers are increasing attention on these aspects of capital: Regulators Request for innovation Building resilience Government 25 Year Plan role of water companies New land use / catchment management policies post Brexit Natural Capital Committee Investors Greater scrutiny of risks e.g. Task Force on Climate-related Financial Disclosures eftec 2

3 WHAT IS NATURAL CAPITAL? Natural capital assets Ecological communities Soils Freshwaters Land Minerals Atmosphere Subsoil assets Oceans Ecosystem Service Flows Inputs from other capital inc human Natural capital benefits Food Fibre (e.g. timber) Energy Fresh water Clean air Climate regulation Recreation Biodiversity/ conservation 3

4 WHAT IS SOCIAL CAPITAL? Social capital focuses on social relationships between water company and customers, land owners, employees etc. Quality of these relationships, e.g. norms of trust, pro-environmental behaviours These relationships have benefits, e.g. water saving behaviours etc. Two key relationships (dependencies) for water sector: Customers behaviours (how to influence? e.g. communications) Delivery partners (e.g. land managers, subcontractors, workforce) eftec 4

5 MEASURING NATURAL & SOCIAL CAPITAL Metric Natural Capital Social Capital The asset involved Types of habitats Groups with which the company has relationships Its quantity Extent, stocks Numbers involved (e.g. households) Its quality Characteristics, conservation status Survey scores for relationship characteristics such as level of trust, etc. Services from the asset Beneficiaries Values Costs Flow of ecosystem services (e.g. water, recreation etc.). People/groups benefiting People/groups benefiting Monetary values where Monetary possiblevalues where possible Current costs of managing Current the costs assets. of managing the assets. Pro-environmental behaviours towards the natural environment eftec 5

6 KEY QUESTIONS ON NATURAL & SOCIAL CAPITAL Company Dependencies Sustaining long term value creation Resilience to future disturbances Impacts On what natural and social capital does the business depend for long term value creation? What impacts does the business have on natural and social capital? eftec 6

7 RECENT DEVELOPMENTS NATURAL CAPITAL NC Protocol NC Committee Workbook Corporate NC Accounting SOCIAL CAPITAL IIRC WBCSD ONS eftec 7

8 UKWIR NATURAL & SOCIAL CAPITAL ACCOUNTING TOOL Why? so that companies can: o Analyse and manage natural and social capital o Understand how these capital assets deliver services o Engage with the relevant stakeholders The NSCA tool: - asks questions by each step that builds evidence/analysis o Objective & Boundary asks what the tool is being used for, along with the spatial and temporal boundaries o Metrics & Baseline establishes the key measures for; base case natural & social capital assets, their benefits, beneficiaries and costs of maintenance o Changes estimates the changes in assets, benefits and beneficiaries arising from the project under assessment o Impact evaluates the monetary value of benefit and cost changes o Reporting assembles the costs and values in a format that supports decision making eftec 8

9 USING THE NSCA TOOL ASSESSING SOCIAL CAPITAL Investment in the social capital built by the relationship of Severn Trent with a network of 51 active groups across the water service area. Over 6,700 volunteers giving 58,000 hours of work, including; clearing litter from river stretches undertaking water quality monitoring undertaking wildlife surveys managing invasive species conservation work eftec 9

10 USING THE NSCA TOOL WATERSIDE CARE BENEFITS Benefits to Severn Trent: Costs savings from water tests conducted Effective resource utilisation through reporting of mis-connections Building trust - commitment from the volunteers and is an indication of a strong and positive relationship Supporting social licence to operate Benefits to wider society: Planting of tress to improve habitat, river quality and amenity Removal of over 3,000 bags of litter from waterways Over 280 habitat enhancement activities ongoing Engagement with over 267 schools, providing education and reinforcing positive values with students Overall benefit to cost ratio 1.8 : 1 eftec 10

11 USES OF NATURAL & SOCIAL CAPITAL APPROACHES Better solutions provide a leading position in policy landscape. Water company role in Government s 25 year plan Influencing agricultural policy in Post-Brexit system Public money for public goods better land use Demonstrating now, what innovations can be explored in PR24 Holistic approach and analysis help choose options that have multiple benefits and assess these Making better decisions in terms of better private and public returns to investment Responding to investors Demonstrating long term value and sustainability Understanding and managing future risks to capitals and taking care of opportunities More realistic planning Resilience to future changes and shocks Understanding the interconnectedness of capitals eftec 11

12 Duncan Royle Duncan Royle Ι 17 May 2018